This impromptu dialog took place over several days in
early 2017 on several different platforms. For readers’ convenience, I have put
all the separate segments together here. To help keep things straight, everything
written by Caplan is set in the Helvitica font and everything
written by Dolan in Times

Isn't a Universal
Basic Income just another name for a negative income tax, such as Tax =
-$10,000 + .3*Income? If so, isn't a Universal Basic Income means-tested
by definition?
The answer to the first question is Yes. UBI is just Milton Friedman's
negative income tax in new packaging.
The answer to the second question, however, is more equivocal. The UBI is
means-tested in the weak sense that your net payment falls with income.
But the UBI dispenses with many other traditional forms of
means-testing. Most notably:
1. Means-testing by age. Most welfare states prioritize children and the
elderly. The implicit theory is that, unlike prime-age adults, the very
young and the very old are unable to provide for themselves.
2. Means-testing by dependents and marital status. Most welfare states
prioritize single moms with minor children. The implicit theory is that
single moms have reduced opportunities to work due to their family
responsibilities.
3. Means-testing by health. Most welfare states prioritize the
disabled. The implicit theory is that they're not healthy enough to work.
4. Means-testing by job history. Most welfare states prioritize people
who recently lost their jobs over people who have never worked, or lost their
jobs a long time ago. The implicit theory is that the short-term
unemployed are unlucky, while the long-term unemployed are lazy.
If your UBI proposal includes factors like these in its formula, it's very hard
to see what makes it a UBI.

If your UBI proposal dispenses with most or all these factors, then it is a
distinctive reform indeed. But "distinctive" is a far cry from
"good."
Advocates correctly note that dropping multi-faceted means-testing reduces
moral hazard: If your monthly payment doesn't depend on your health, you have
no reason to fake bad health.
But there is also a gargantuan disadvantage: Dropping multi-faceted
means-testing greatly increases the number of eligible recipients.
If perfectly able-bodied, childless adults are eligible for free money, plenty
will take it - and many won't work at all. Taxes on remaining workers
have to rise to pay for them. This probably won't create a "UBI
death spiral," but a milder sloth spiral definitely kicks in, especially
over the longer run as stigma against idleness erodes. And the burden of
supporting able-bodied non-workers is also very likely to cut into funding for
the more deserving poor.
Frankly, given the bleak
long-run fiscal forecast for the U.S., I'm baffled that anyone with
libertarian sympathies takes the UBI seriously. The welfare state is
already unsustainable, largely because our means-testing by age and health
isn't stringent enough. The elderly may have trouble working now,
but since they had a lifetime to save for their own retirements, few of
the indigent elderly are victims of circumstance. And given the huge
long-run rise in the share of U.S. adults on disability despite rising health
and less strenuous jobs, its clearly far too easy to plead disability.
What's especially strange is that the bleak long-run fiscal forecast makes old-school
libertarian austerity more relevant than ever. Why are so many
libertarians running away from our core ideas when conditions are nearly ripe
for mainstream America to finally listen to us?

In a recent
post on EconLog, Bryan Caplan writes, “I’m baffled that anyone with
libertarian sympathies takes the UBI [universal basic income] seriously.” I
love a challenge. Let me try to un-baffle you, Bryan, and the many others who
might be as puzzled as you are. Here are three kinds of libertarians who might
take a UBI very seriously indeed.

Libertarian pragmatists

Philosophical issues aside, what galls many
libertarians most about government is the failure of many policies to produce
their intended results. Poverty policy is Exhibit A. By some
calculations, the government already spends enough on poverty programs to
raise all low-income families to the official poverty level, even though the
poverty rate barely budges from year to year. Wouldn’t it be better to spend
that money in a way that helps poor people more effectively?

A UBI would help by ending the way benefit
reductions and “welfare cliffs” in current programs undermine work
incentives. When you add together the effects of SNAP, TANF, CHIP,
EITC and the rest of the alphabet soup, and account for work-related expenses
like transportation and child care,
a worker from a poor household can end up taking home nothing, even from a
full-time job. A UBI has no benefit reductions. You get it whether you work or
not, so you keep every added dollar you earn (income and payroll taxes
excepted, and these are low for the poor).

But, wait, you might say. Why would I work at
all if you gave me a UBI? That might be a problem if you got your UBI on top of
existing programs, but if it replaced those programs, work incentives would be strengthened, not
weakened. In which situation would you be more likely to take a job: one where
you get $800 a month as a UBI plus a chance to earn another $800 from a job,
all of which you can keep, or one where your get $800 a month in food stamps
and housing vouchers, and anything extra you earn is taken away in benefit
reductions?

Or, you might say, a UBI might be fine for
the poor, but wouldn’t it be unaffordable to give it to the middle class and
the rich as well? Yes, if you added it on top of all the middle-class welfare
and tax loopholes for the rich that we have now. No, if the UBI replaced
existing tax preferences and other programs that we now lavish on middle- and
upper-income households. Done
properly, a UBI would streamline the entire system of federal taxes and
transfers without any aggregate impact on the federal budget.

Classical liberals

Not all of those with libertarian sympathies
are anarcho-capitalist purists. Many classical liberals, even those whom purist
libertarians lionize in other contexts, are more open to the idea of a social
safety net as a legitimate function of a limited government.

The assurance of a
certain minimum income for everyone, or a sort of floor below which nobody need
fall even when he is unable to provide for himself, appears not only to be a
wholly legitimate protection against a risk common to all, but a necessary part
of the Great Society.

Philosophically, classical liberals see
“social insurance” of this kind as something to which they would willingly
assent if they considered it behind a “veil of ignorance,” where they did not
know if they themselves would be born rich or poor. Once the philosophical
hurdle is overcome, the practical advantages of a UBI become highly attractive.
In terms of administrative efficiency and work incentives, a UBI wins hands
down over the current welfare system, and beats even the negative
income tax famously championed by Milton Friedman, another classical
liberal,.

Lifestyle libertarians

The libertarian sympathies of still others
arise from the conviction that all people should be able to live
their lives according to their own values, so long as they don’t interfere
with the right of others to do likewise. These lifestyle libertarians are drawn
to a UBI because of its contrast with the nanny state mentality that
characterizes current policies. Why should social programs treat married couples
differently from people living in unconventional communal arrangements? Why
should welfare recipients have to undergo intrusive drug testing? Why should food stamps let
you buy hamburger and feed it to your dog, but not buy dog food?

Writing for Reason.com,
Matthew Feeney urges libertarians to stop arguing in principle against the
redistribution of wealth. Instead, he says, “scrap the welfare state and give
people free money.” Feeney sees a UBI as an alternative that “promotes personal
responsibility, reduces the humiliations associated with the current system,
and reduces administrative waste in government.”

So there you are. A UBI is a policy for
pragmatic critics of well-intentioned but ineffective government, for classical
liberals, and for advocates of personal freedom. No wonder so many libertarians
take the idea seriously.

Here
are three kinds of libertarians who might take a UBI very seriously indeed.

Libertarian
pragmatists

...By some calculations, the government
already spends enough on poverty programs to raise all low-income families to
the official poverty level, even though the poverty rate barely budges from
year to year. Wouldn't it be better to spend that money in a way that helps
poor people more effectively?

Sure, holding spending constant.

A
UBI would help by ending the way benefit reductions and "welfare
cliffs" in current programs undermine work incentives. A UBI has no
benefit reductions. You get it whether you work or not, so you keep every added
dollar you earn (income and payroll taxes excepted, and these are low for the
poor).

But,
wait, you might say. Why would I work at all if you gave me a UBI? That might
be a problem if you got your UBI on top of existing programs, but if it
replaced those programs, work incentives would be strengthened, not weakened.

This is a serious overstatement.

First, as Dolan
acknowledges elsewhere, the disincentives are theoretically ambiguous.Yes, the UBI encourages work via the
substitution effect—if you get paid more per hour after taxes, work is more
attractive.But it also discourages work
via the income effect—if you get more free money, work is less attractive.

Second, as I emphasize in the piece to which Dolan is
responding, existing welfare states make it hard for prime-age, healthy,
childless citizens to get free money.For the vast population in this category, a UBI is a clear addition to
existing programs, because they're currently ineligible for most existing
programs.

Or,
you might say, a UBI might be fine for the poor, but wouldn't it be
unaffordable to give it to the middle class and the rich as well? Yes, if you
added it on top of all the middle-class welfare and tax loopholes for the rich
that we have now. No, if the UBI replaced existing tax preferences and other
programs that we now lavish on middle- and upper-income households. Done
properly, a UBI would streamline the entire system of federal taxes and
transfers without any aggregate impact on the federal budget.

I urge the friends of UBI to click on the "Done
properly" link.In it, Dolan
crunches a lot of numbers to estimate the maximum feasible UBI if (a) taxes stay
the same, and (b) we abolish a vast array of government programs.His answer: $4,452 per person per year.I say this confirms the obvious: A UBI high
enough to be politically appealing would be utterly unaffordable because it
wastes so much money on the non-poor.

Classical liberals

Not
all of those with libertarian sympathies are anarcho-capitalist purists. Many
classical liberals, even those whom purist libertarians lionize in other
contexts, are more open to the idea of a social
safety net as a legitimate function of a limited government.

Indeed.But even
moderate classical liberals have traditionally tempered this concession with
elevated concern for scarcity, disincentives, desert, and long-run fiscal
stability.Concern for scarcity makes
them ask, "Shouldn't we target anti-poverty resources on the very poor,
instead of helping everyone?"Concern for disincentives makes them ask, "What about the UBI's
effect on prime-age, healthy, childless citizens?"Concern for desert makes them ask,
"Shouldn't we target anti-poverty resources on people who genuinely can't
help themselves, like children and the severely handicapped?"Concern for long-run fiscal stability makes
them ask, "Shouldn't we get our fiscal house in order before we
contemplate massive new spending programs?"I'm not saying that libertarians should
oppose the UBI because it's inconsistent with anarcho-capitalism.I'm saying that libertarians should oppose
the UBI because it's even more oblivious to our many well-founded reservations
about the welfare state than the status quo.

Lifestyle
libertarians

The
libertarian sympathies of still others arise from the conviction that all
people should be able to live
their lives according to their own values, so long as they don't interfere
with the right of others to do likewise. These lifestyle libertarians are drawn
to a UBI because of its contrast with the nanny state mentality that
characterizes current policies. Why should social programs treat married
couples differently from people living in unconventional communal arrangements?
Why should welfare recipients have to undergo intrusive drug testing? Why
should food
stamps let you buy hamburger and feed it to your dog, but not buy dog food?

Simple: Because people on welfare are interfering with taxpayers'
right to live their lives according to their own values.It's entirely appropriate, then, for
taxpayers to impose conditions on (a) who gets the money, and (b) what they
have to do to get it.This principle is
widely accepted even for voluntary charity: If you want to sleep on my couch
and eat my food, you have to follow my rules.This applies even more clearly for involuntary charity: If you're living
off my money without my consent, you have a grave responsibility to spend my
money prudently and strive to become self-supporting.

Writing
for Reason.com,
Matthew Feeney urges libertarians to stop arguing in principle against the
redistribution of wealth. Instead, he says, "scrap the welfare state and
give people free money." Feeney sees a UBI as an alternative that
"promotes personal responsibility, reduces the humiliations associated
with the current system, and reduces administrative waste in government."

This neglects a middle path for libertarians: Arguing for
limits on the redistribution of wealth.What kind of limits?"You
shouldn't get money unless you are absolutely poor through no fault of your
own" isn't just great place to start.It also has great intuitive appeal for non-libertarians.

First of all, thank you, Bryan, for
the civil, cogent, and detailed response. I think we might even find common
ground--I might eventually be able to get you to concede that libertarian
sympathizers should "take a UBI seriously" (that is not the same as
drinking the UBI Kool-aid, after all) and in return, I will concede that a UBI
is not a magic bullet, but nonetheless is worth serious consideration.

A couple of specifics:

1. You say that I acknowledge
elsewhere that the incentives are theoretically ambiguous: income effect vs. substitution
effect and all that. Fine, but you give the wrong link. The place where I
discuss that issue in detail is in the two-part series that starts
here. Part 1 of that post deals with theory, and shows that although there
is some ambiguity, it requires very special and implausible assumptions for the
income effect to outweigh the substitution effect. Part 2 looks at the
empirical literature, and concludes that the overwhelming weight of evidence
suggests that a UBI improves work incentives relative to any means tested
program.

2. You are very right to zero in on
the "done properly" proviso as critical. I completely agree that
tacking a UBI onto the existing system would not work. I also strenuously
object to the line you get from some conservatives that a UBI should replace
welfare for the poor, but leave all tax and transfer goodies intact for the
rent-seeking middle and upper classes. What is sauce for the goose is sauce for
the gander. Does that make a UBI a hard sell politically? Maybe. I'm a lowly
economist. As the song says, "If the rocket goes up/ who cares where it
comes down?/ That's not my department/says Werner von Braun."

3. Taxpayers have right to attach
conditions to public charity. I don't
dispute that. Whether pragmatic considerations might lead them to avoid
excessive or silly conditions is another matter.

4. "You shouldn't get aid
unless you are poor through absolutely no fault of your own." Yes, that
argument has some moral force. However, pragmatically, it is hard to pull off
since it requires a huge welfare bureaucracy to decide who qualifies, and the
very effort to decide has a Heisenberger-like way of changing the nature of the
phenomenon you are trying to evaluate. Exhibit A is our disability system,
which tries to follow the principle you suggest, but ends up with massive
unintended consequences (UBI vs. disability is subject of a forthcoming post.)

First of all, thank you, Bryan, for the civil, cogent, and detailed
response.

Likewise.

1. You say that I acknowledge
elsewhere that the incentives are theoretically ambiguous,income effect
vs.substitution effect and all that. Fine, but you give the wrong link. The
place where I discuss that issue in detail is in the two-part series that starts
here. Part 1 of that post deals with theory, and shows that although there
is some ambiguity, it requires very special and implausible assumptions for the
income effect to outweigh the substition effect. Part 2 looks at the empirical
literature, and concludes that the overwhelming weight of evidence suggests
that a UBI improves work incentives relative to any means tested program.

My apologies for
neglecting your Part 2.Well-done; I
encourage everyone interested to read it.But I'm puzzled that you describe the evidence you summarize as
"overwhelming."It seems
fairly weak overall to me.And my
understanding of the empirical consensus is that, in general, income effects
are at least as large as substitution effects.I'd put more weight on that standard finding than experiments from
decades ago.

Even if you're
right, you're ignoring my central point: The UBI unambiguously hurts incentives
for the vast population that's currently ineligible for most government
benefits.

2. You are very right to zero in on
the "done properly" proviso as critical. I completely agree that
tacking a UBI onto the existing system would not work. I also strenuously
object to the line you get from some conservatives that a UBI should replace
welfare for the poor, but leave all tax and transfer goodies intact for the
rent-seeking middle and upper classes. What is sauce for the goose is sauce for
the gander. Does that make a UBI a hard sell politically? Maybe. I'm a lowly
economist. As the song says, "If the rocket goes up/who cares where it comes
down?/That's not my department/says Werner von Braun."

My point is
stronger: Even if we followed your proposal to the letter, the highest income
floor you say we can afford is far lower than almost any non-libertarian would
accept.This isn't surprising, because
you waste so much money on the able-bodied.

3. Taxpayers have right to attach
conditions to public charity. I don't dispute that. Whether pragmatic
considerations might lead them to avoid excessive or silly conditions is
another matter.

I'm against "silly,"
too.But where do you see
"excessive" conditions in the U.S. welfare state?Wherever I look, I see only profligacy.

4. "You shouldn't get aid
unless you are poor through absolutely no fault of your own." Yes, that
argument has some moral force. However, pragmatically, it is hard to pull off
since it requires a huge welfare bureaucracy to decide who qualifies, and the
very effort to decide has a Heisenberger-like way of changing the nature of the
phenomenon you are trying to evaluate. Exhibit A is our disability system,
which tries to follow the principle you suggest, but ends up with massive
unintended consequences (UBI vs. disability is subject of a forthcoming post.)

The American
disability system's whole problem is that it's gradually moved away from the
principle I suggest.It used to be hard
to go on disability; now it's easy.We
should blame the unintended consequences not on standards, but lack of
standards.Reformist libertarians should
be pushing to restrict benefits to the truly disabled, not extending them to
everyone regardless of need.

Caplan: I'm puzzled that you describe the evidence you summarize as
"overwhelming." It seems fairly weak overall to me. And my
understanding of the empirical consensus is that, in general, income effects
are at least as large as substitution effects. I'd put more weight on that
standard finding than experiments from decades ago.

I agree that the evidence from the
income maintenance experiments of the 1970s and 1980s is old and inconclusive.
If it were not so often cited by UBI opponents as “proof” that a UBI could not
work, I would not have spent so much time examining it. As for more recent
evidence, the CBO
working paper that I cited is the most comprehensive literature review I
have been able to find. The CBO review reaches the following conclusions
regarding labor supply elasticities:

Among
men and single women, substitution elasticities appear to have increased
and now range from 0.1 to 0.3. Income elasticities still appear to be smaller
in absolute value than substitution elasticities and remain in the range
of -0.1 to zero.

Labor
supply elasticities of married women—historically much higher than the
elasticities of men and unmarried women—have fallen substantially in the
last three decades, although they are still higher than elasticities of
men and unmarried women. The substitution elasticity of married women
appears to range from 0.2 to 0.4, and their income elasticity appears to
range from -0.1 to zero.

If you or any readers know of other recent studies that
differ from these results, please send me the links.

Really, though, the numerical values
of the elasticities are not the whole story. My central point is that when a
UBI replaces existing forms of aid, there is no income effect at all. Suppose,
for example, that a married couple with two children now get $18,000 per year
in food stamps, housing vouchers, childcare subsidies, and other forms of aid,
with a benefit reduction rate of 50 percent. We get rid of all of that and instead
give the family an $18,000 UBI ($4,500 per person). Their base income does not
change, so there is no income effect. However, there is a full substitution
effect. Instead of keeping just fifty cents from each added dollar they earn,
they get to keep all of it (subject only to payroll and income taxes, if
applicable). That very well might be enough to make it worthwhile to put in a
few more hours at a minimum wage job—especially for the wife, whose elasticity
of supply is higher (according to the CBO).

Caplan: Even if you're right, you're ignoring my central point: The UBI
unambiguously hurts incentives for the vast population that's currently
ineligible for most government benefits.

Sorry if I’ve ignored this point,
because it is a sound one. Isaac
Schapiro makes a similar point in a report from the Center for Budget and
Policy Priorities, to which I replied at length in an earlier
post. To both you and Schapiro, I say, yes, the elasticities argument for a
UBI is stronger for households that face high effective marginal tax rates than
for those who face lower EMTRs because they receive no benefits. In the extreme
case, they are exposed to the full income effect and get no help at all from
the substitution effect.

I would make two points here. The
first is empirical. I’d like to see a count of how many poor households or
individuals get no benefits. Is it a “vast” number, or a relatively small one?
And what kind of people are they? If, for example, they are mentally ill and
substance-dependent homeless people, I’ll concede that a UBI would be unlikely
to get them into the job market. I’ve often said that a UBI is not a magic
bullet. It certainly is not an effective weapon against mental illness and
substance abuse. I’ll try to do some research on this and post the results.
Thanks for pointing out the importance of the question.

Second, I’ll concede that the target
group I have the most sympathy for in my writings on the UBI consists of
households that are already at least marginally attached to the labor market
and who have incomes in the range from half to double the poverty level. They
are the ones who are most screwed over by the current welfare system and who
would benefit most from a UBI, IMO.

Caplan: Even if we followed your proposal to the letter, the highest
income floor you say we can afford is far lower than almost any non-libertarian
would accept. This isn't surprising, because you waste so much money on the
able-bodied.

First, I agree, there are some
non-libertarians who want a UBI high enough to let everyone live a comfortable
middle-class life without working at all. That is particularly the case with
some who write about the UBI in the context of an imagined automated utopia in
which no one at all has to work. I say, pie in the sky. But let’s not get off
topic. This is a debate about why libertarians
might take a UBI seriously. I don’t have to worry that my $4,500 UBI is too
stingy. I have to make the case that it is not too high.

Second, I think when you write that
my version of the UBI “wastes so much money on the able bodied,” you haven’t
really thought through the whole program. Again and again, I have emphasized
that in order not to “waste money on the able bodied,” a viable UBI I must
replace not just welfare for the poor, but “middle-class welfare” as well—much
of which comes in the form of tax expenditures.

For example, let’s say a
middle-class family of four is getting $18,000 per year in assorted tax
deductions—minimum allowance, mortgage interest, retirement savings,
employer-provided insurance, an all the rest. If we give that family an $18,000
UBI, and at the same time cancel their $18,000 of tax expenditures, we have not
“wasted” any money at all. What we have done is to change the form in which
that money is spent, and do it in a completely revenue neutral way. Along the
way, we get rid of some of the perverse incentives in current tax expenditure
programs, such as “job lock” resulting from deductions for employer-provided
healthcare and the bias against renters embodied in the mortgage deduction.

Similarly, to avoid “wasting money on the able bodied,” I propose that all
safety net programs for the nonpoor also be integrated into the UBI. Take
unemployment benefits, for example. In some cases those are greater than my
suggested level for the UBI, in some cases less. I say, give eligible individuals
the right to take unemployment benefits or the UBI, whichever is greater, but
do not allow “double dipping.” Same for Social Security and some smaller
programs.

Caplan: But where do you see "excessive" conditions in the
U.S. welfare state?

Example: Subjecting welfare
recipients to drug tests. Example: Conditions that restrict interstate
mobility, as is often the case with programs administered at the state or
municipal level, and which would be intensified with some GOP proposals for
“block granting” everything. Example: Provisions that unnecessarily add to the
red tape of getting benefits, as with disability programs (see below).

Caplan: The American disability system's whole problem is that it's
gradually moved away from the principle I suggest. It used to be hard to go on
disability; now it's easy. We should blame the unintended consequences not on
standards, but lack of standards. Reformist libertarians should be pushing to
restrict benefits to the truly disabled, not extending them to everyone regardless
of need.

I know I have been remiss in not
dealing with disability at length, and I keep promising to do so. Be patient.
Meanwhile, just one point: The real problem, as analyzed by Autor and others, is not that it
is too easy to get on disability, but that it is too hard to get off.

It often takes several years and
costly legal help to get on disability, especially if the person is (as you
suggest) only marginally disabled. Once you succeed, there is a tremendous
incentive to stay on, since disability is for life and includes full medical
benefits. Even a short spell of work can kick you off for good, and once you
are off, it is even harder to get back on. That is why I call disability a UBI
with a perverse twist: You get it only if you guarantee that you will never
work again.

My basic proposal would be to
integrate the UBI and disability through a double-dipping rule. Now, leaving
disability is an all-or-nothing, once-in-a-lifetime choice. If you attempt to
get back to work is a failure, you are screwed. With a UBI in force, a person
getting disability would at least have the UBI to fall back on. The UBI might
be less than full disability is now, but the step down in benefits would be
less for a person leaving disability. That would improve incentives for getting
back to work, and also reduce incentives to spend on the legal representation a
marginally disabled person needs to get on disability in the first place. I
promise, I’ll expand on this in full in a coming separate post.

Caplan
quoting Dolan: As for more recent evidence, the CBO
working paper that I cited is the most comprehensive literature review I
have been able to find. The CBO review reaches the following conclusions
regarding labor supply elasticities:

·Among men and single women,
substitution elasticities appear to have increased and now range from 0.1 to
0.3. Income elasticities still appear to be smaller in absolute value than substitution
elasticities and remain in the range of -0.1 to zero.

·Labor supply elasticities of married
women--historically much higher than the elasticities of men and unmarried
women--have fallen substantially in the last three decades, although they are
still higher than elasticities of men and unmarried women. The substitution
elasticity of married women appears to range from 0.2 to 0.4, and their income
elasticity appears to range from -0.1 to zero.

This is news to me. I'd have to
spend a week or so reading to evaluate this, but thanks for alerting me to this
evidence.

My other big concern is that behavioral economics is highly relevant
here. The disincentives you get after removing all inconvenience and most
stigma will probably be larger than we get under the current regime.

Caplan quoting Dolan quoting Caplan’s
previous post: Even if you're right, you're ignoring my central point: The UBI
unambiguously hurts incentives for the vast population that's currently
ineligible for most government benefits.

Caplan quoting Dolan: Sorry if I've
ignored this point, because it is a sound one. Isaac
Schapiro makes a similar point in a report from the Center for Budget and
Policy Priorities, to which I replied at length in an earlier post. To both you
and Schapiro, I say, yes, the elasticities argument for a UBI is stronger for
households that face high effective marginal tax rates than for those who face
lower EMTRs because they receive no benefits. In the extreme case, they are
exposed to the full income effect and get no help at all from the substitution
effect.

I would make two points here. The
first is empirical. I'd like to see a count of how many poor households or
individuals get no benefits. Is it a "vast" number, or a relatively
small one? And what kind of people are they?

I deliberately
said "ineligible for most benefits," not all.
What kind of people do I have in mind? Healthy, childless (or non-custodial)
adults, aged 18-64. Labor force participation for this group is already
shockingly low for people without college degrees. I can easily see it
going far lower under a UBI.

Caplan quoting Dolan quoting Caplan’s previous post: Even if we followed
your proposal to the letter, the highest income floor you say we can afford is
far lower than almost any non-libertarian would accept. This isn't surprising,
because you waste so much money on the able-bodied.

Caplan quoting Dolan: First, I
agree, there are some non-libertarians who want a UBI high enough to let
everyone live a comfortable middle-class life without working at all. That is
particularly the case with some who write about the UBI in the context of an
imagined automated utopia in which no one at all has to work. I say, pie in the
sky. But let's not get off topic. This is a debate about why libertarians might
take a UBI seriously. I don't have to worry that my $4,500 UBI is too stingy. I
have to make the case that it is not too high.

My point: If the
UBI you propose is lower than most people would accept, then you, too, should
be worried that if we get a UBI, it will be fiscally disastrous.
My challenge: Instead of coming up with a bold, new idea that could easily end
very badly, why not join me in simply pushing for austerity within the current
system?

Caplan quoting Dolan: Second, I
think when you write that my version of the UBI "wastes so much money on
the able bodied," you haven't really thought through the whole program.
Again and again, I have emphasized that in order not to "waste money on
the able bodied," a viable UBI I must replace not just welfare for the
poor, but "middle-class welfare" as well--much of which comes in the
form of tax expenditures.

Both the status
quo and your proposed reform waste hundreds of billions on the
able-bodied. But given the massive cuts you propose, it's not clear that
you're wasting more money on the able-bodied than the status quo
does. My point, again: If we're going to be reformists, why push a bold,
new idea that retains the basic flaws of the status quo, instead of just
calling for less wasteful spending?

Caplan quoting Dolan quoting Caplan’s
previous post:But where do you see
"excessive" conditions in the U.S. welfare state?

Caplan quoting Dolan: Example:
Subjecting welfare recipients to drug tests. Example: Conditions that restrict
interstate mobility, as is often the case with programs administered at the
state or municipal level, and which would be intensified with some GOP
proposals for "block granting" everything. Example: Provisions that
unnecessarily add to the red tape of getting benefits, as with disability programs
(see below).

Each of these has
an obvious rationale.

a. Drug tests.If people want taxpayer help, they should be trying to make themselves
employable, not getting high.

Caplan quoting Dolan quoting Caplan’s
previous post: The American disability system's whole problem is that it's
gradually moved away from the principle I suggest. It used to be hard to go on
disability; now it's easy. We should blame the unintended consequences not on
standards, but lack of standards. Reformist libertarians should be pushing to
restrict benefits to the truly disabled, not extending them to everyone
regardless of need.

Caplan quoting Dolan: I know I have
been remiss in not dealing with disability at length, and I keep promising to
do so. Be patient. Meanwhile, just one point: The real problem, as analyzed by Autor and others, is not that it
is too easy to get on disability, but that it is too hard to get off.

A fair point, but
it's fully consistent with my claim that the problem is lack of
standards. People with conditions that occasionally get better should
have to periodically prove continuing disability. They should be
subject to audits. There should be credible penalties for fraud.
And so on. If you were running a voluntary charity to help the disabled,
these measures would be common sense. Involuntary charity should be held
to at least as high a standard.

Dolan: Closing statement

Whenever
I engage with people about a UBI, I think of the blind men and the elephant.
One felt the tail and said, “An elephant is like a rope.” One felt the legs and
said, “An elephant is like a tree,” and so on.

Reactions
to a UBI are like that. Some insist that even a minimal UBI will induce people
to quit their jobs and spend their lives singing Kumbaya around a campfire;
others focus on the fear that automation will make work itself obsolete. Some see
it as immoral to help someone who doesn’t need it; others worry more about
failing to help someone who is in need. Some see the poor as neatly separable
into people who are unable to help themselves through no fault of their own and
those who are unwilling to make the effort to help themselves. Others see a
more nuanced picture that includes many who are struggling against difficult
odds (created in part by the current welfare system itself) to work their way
out of poverty.

My own
focus is on a UBI as a pragmatic improvement current policies, which impose
high work disincentives on the poor yet leave poverty rates high, and at the
same time, lavish billions of “middle class welfare” on the non-poor. A UBI is
not a magic bullet that will solve all social ills, but I continue to believe
that the most common objections to a UBI—“we can’t afford it,” and “it would
destroy work incentives”—are wrong as a matter ofbasic economics. Those are the reasons why I
do not find it surprising that many people with libertarian sympathies take the
idea of a UBI seriously.

I do recognize
that there are many points of view within the libertarian community. Not all
are pragmatists. Many libertarians are not interested in making government work
better—only in shrinking it. I understand that these will be more sympathetic
to Caplan’s call for welfare austerity
than to my argument that replacing the current welfare system with a UBI would
improve administrative efficiency, increase work incentives, and reduce
intrusiveness. If pragmatic reform is the enemy of liberty, I plead guilty.

My
thanks to Bryan Caplan for this dialog, which has improved my understanding
both of his positions and my own.

1 comment:

the best solution was mentioned by Atkinson in his last book, 'Inequality', but otherwise rarely discussed, and is a combination of a modest UBI with a job guarantee or ‘the state as employer of last resort’ at min wage, flexible hours and good conditions, which would put a floor under private sector wages and conditions. The BI would add to irregular earnings for many self employed, gaps in atypical jobs, and support those, mainly women, working at home for no formal pay, caring for children and elderly. By taxing all income including BI, high earner’s BI would be recouped, so total cost much less.Better than means testing for incentive reasons.

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